Indonesian government is planning to take a new step on thermal coal export duty from coming month. The government is still considering the merits of imposing new tax on coal exports.
Indonesia, one of the largest thermal coal exporters in the globe, is planning to levy new tax on thermal coal exports from 8 Aug’15, which has already been proposed by the government at 1.5%.
Two types of coal mining licenses are provided by the Indonesian government, CCoW and IUP.
• CCoW license holders – pay 45% corporate tax and 13.5% royalty
• IUP license holders – pay 25% corporate tax and 3-4% royalty
“The new tax would be applicable for all IUP (Izin Usaha Pertambangan) license holders and will fill the gap between IUP and CCoW (Coal Contract of Works) license holders”,said Supriatna Suhala, executive director of Indonesian Coal Mining Association.
Amid sluggish global economic growth where the thermal coal market is bearish and not hoping for any recovery till the end of the year, the Indonesian government’s new move on coal exports will hit mid-sized miners more as they are already struggling with low prices.
The new export duty will be levied on FOB prices and sellers might have to pay the new tax in advance, similar to the coal royalty now, prior to shipping cargoes.
Coal Transaction in Local Currency (Indonesian Rupiah)
The Indonesian government also asked the miners to conduct all domestic transactions in their local currency IDR since 1 July.
Indonesian mining companies procure loans for expansion from foreign creditors as they offer cheaper interest rates of around 2-3% compared with about 8% by local financiers.
This is a problem since mining companies would now have to hedge at an additional cost because they have to pay back their loans in US dollar as the local currency has weakened against the greenback.
– sourced
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